Stocks Climb on Strong Q3 Earnings and Easing Trade Concerns

The S&P 500 Index ($SPX) (SPY) today is up +1.01%, the Dow Jones Industrials Index ($DOWI) (DIA) is up +0.64%, and the Nasdaq 100 Index ($IUXX) (QQQ) is up +1.40%.  December E-mini S&P futures (ESZ25) are up +0.95%, and December E-mini Nasdaq futures (NQZ25) are up +1.35%.

Stock indexes are moving higher today as better-than-expected quarterly earnings results spark risk-on sentiment in equity markets. Strength in chipmakers is leading technology stocks higher, with ASML Holding up more than +3% after reporting stronger-than-expected Q3 new orders.  Also, Morgan Stanley is up more than +6% and Bank of America is up more than +5% after reporting solid Q3 earnings.

Stocks extended their gains today as trade concerns over China eased slightly after Treasury Secretary Bessent suggested the possibility of a longer China tariff truce, tied explicitly to rare earth materials.  Bessent also said that as far as he's aware, President Trump "is a go" on meeting Chinese President Xi Jinping later this month in South Korea.

Stocks are also climbing after dovish Fed comments bolstered expectations for the Fed to cut interest rates at the next FOMC meeting on October 28-29.  The 10-year T-note yield fell to a 4-week low of 4.00% today after Boston Fed President Susan Collins said it is prudent for the Fed to cut rates a bit more this year. 

The escalation of trade tensions between the US and China, along with the ongoing US government shutdown, has sparked a buying spree in precious metals as a haven, with gold reaching a fresh all-time high today. Also, global bond markets have become the recipients of safe-haven demand from the trade turmoil, as bond yields declined worldwide.  The 10-year German bund yield dropped to a 3.25-month low of 2.57% today, and the 10-year T-note yield fell to a 3.5-week low of 4.00%. 

Today's private survey news was supportive of stocks after the Oct Empire manufacturing survey general business conditions index rose +19.4 to 10.7, stronger than expectations of -1.8.

US MBA mortgage applications fell -1.8% in the week ended October 10, with the purchase mortgage sub-index down -2.7% and the refinancing mortgage sub-index down -1.0%.  The average 30-year fixed rate mortgage fell -1 bp to 6.42% from 6.43% in the prior week.

Boston Fed President Susan Collins said, "With inflation risks somewhat more contained, but greater risks to employment, it seems prudent to normalize policy a bit further this year to support the labor market."

The shutdown of the US government continues, weighing on market sentiment and delaying key economic reports.  The government shutdown means delays in the release of government reports, including the last two weeks of weekly initial unemployment claims, the Aug US trade report, and the Sep payroll report.  Last Friday, the Bureau of Labor Statistics (BLS) said that it will release the September consumer price report, which was originally scheduled to be released today, on October 24.  The White House has warned that if the government shutdown lingers, it would trigger widespread dismissals of employees in government programs that don't align with President Trump's priorities.  Bloomberg Economics estimates that 640,000 federal workers will be furloughed during the shutdown, which would expand jobless claims and push the unemployment rate up to 4.7%.

The markets this week will focus on earnings results as the Q3 earnings season begins.  Rising corporate earnings expectations are a bullish backdrop for stocks.  According to Bloomberg Intelligence, 71% of the 24 S&P 500 companies that have reported so far have beaten forecasts.  Also, more than 22% of companies in the S&P 500 that provided guidance for their Q3 earnings results are expected to beat analysts' expectations, the highest in a year.  However, Q3 profits are expected to have risen by +7.2% y/y, the smallest increase in two years.  Also, Q3 sales growth is projected to slow to +5.9% y/y from 6.4% in Q2. 

The markets are pricing in a 98% chance of a -25 bp rate cut at the next FOMC meeting on Oct 28-29. 

Overseas stock markets are higher today.  The Euro Stoxx 50 is up +1.04%.  China's Shanghai Composite closed up +1.22%.  Japan's Nikkei Stock 225 closed up +1.76%.

Interest Rates

December 10-year T-notes (ZNZ5) today are up +2 ticks.  The 10-year T-note yield is down -1.9 bp to 4.013%.  Dec -T-notes matched Tuesday's 4-week high today, and the 10-year T-note yield fell to a 4-week low of 3.998%.  Dovish comments from Boston Fed President Susan Collins gave T-notes a boost when she said it is prudent for the Fed to cut rates a bit more this year. 

Also, falling inflation expectations are supportive of T-notes after the 10-year breakeven inflation rate fell to a 3.25-month low today of 2.293%. T-notes also have support amid concerns about the ongoing US government shutdown, which could lead to additional job losses, reduced consumer spending, and a weakened US economy, potentially allowing the Fed to continue cutting interest rates.  

Strength in stocks today is limiting the upside in T-notes. Also, the stronger-than-expected Oct Empire manufacturing index was hawkish for Fed policy and bearish for T-notes.

European government bond yields are moving lower today.  The 10-year German bund yield dropped to a 3.25-month low of 2.565% and is down -3.9 bp at 2.571%.  The 10-year UK gilt yield fell to a 2.25-month low of 4.523% and is down -5.2 bp to 4.538%.

Eurozone Aug industrial production fell -1.2% m/m, the biggest decline in 4 months, but better than expectations of -1.6% m/m.

ECB Governing Council member Makhlouf said he's more worried that inflation will come in above the ECB's 2% target than below it.

ECB Governing Council member Dolenc said that the current ECB policy "doesn't stimulate inflationary pressures on one hand, while not hindering economic activity on the other," so he sees no reason to change interest rates this month or in the coming months.

Swaps are discounting a 2% chance for a -25 bp rate cut by the ECB at its next policy meeting on October 30.

US Stock Movers

Chipmakers and AI infrastructure stocks are climbing today, with ASML Holding NV (ASML) up more than +3% after reporting stronger-than-expected Q3 new orders.  Also, Advanced Micro Devices (AMD) is up more than +7% to lead gainers in the Nasdaq 100, and KLA Corp (KLAC) is up more than +5%.  In addition, Lam Research (LRCX), Broadcom (AVGO), Applied Materials (AMAT), and Intel (INTC) are up more than +3%.

Bunge Global SA (BG) is up more than +13% to lead gainers in the S&P 500 after it projected full-year adjusted EPS of $7.30 to $7.60 for its combined merger with Viterra.

Papa John's International (PZZA) is up more than +8% after Reuters reported that Apollo Global Management submitted a bid within the last week to take the company private at $64 a share.

Morgan Stanley (MS) is up more than +6% after reporting Q3 FICC sales and trading revenue of $2.17 billion, stronger than the consensus of $2.07 billion.

Bank of America (BAC) is up more than +5% after reporting Q3 net interest income of $15.23 billion, above the consensus of $15.03 billion. 

BrightSpring Health (BTSG) is up more than +4% after S&P Dow Jones Indices said the company will replace Veritex Holdings in the S&P SmallCap 600 effective before the opening of trading on Monday, October 20. 

Amphenol Corp (APH) is up more than +2% after Bank of America Global Research upgraded the stock to buy from neutral with a price target of $150. 

Dollar Tree (DLTR) is up more than +1% after projecting earnings per share to gain as much as 10% annually over the next three years. 

Sable Offshore (SOC) is down more than -19% after the Santa Barbara Superior Court issued a tentative ruling that will deny the firm's claims against the Coastal Commission for issuing cease and desist orders during Sable's repair program on the Las Flores pipeline.  

Progressive Corp (PGR) is down more than -8% to lead losers in the S&P 500 after reporting Q3 net premiums written of $21.38 billion, below the consensus of $21.65 billion.

Hancock Whitney (HWC) is down more than -5% after reporting a Q3 net interest margin of 3.49%, below the consensus of 3.52%. 

PNC Financial Services Group (PNC) is down more than -4% after forecasting Q4 revenue will be "stable to down 1%" q/q. 

Abbott Laboratories (ABT) is down more than -3% after cutting the top end of its 2025 earnings guidance to $5.18 from $5.20.

Ibotta Inc (IBTA) is down more than -2% after Goldman Sachs downgraded the stock to sell from neutral with a price target of $12.

F5 Inc (FFIV) is down more than -2% after it reported that a nation-state cyberattack gained long-term unauthorized access to parts of its system.

Earnings Reports(10/15/2025)

Abbott Laboratories (ABT), ASML Holding NV (ASML), Bank of America Corp (BAC), Citizens Financial Group Inc (CFG), First Horizon Corp (FHN), First Industrial Realty Trust (FR), JB Hunt Transport Services Inc (JBHT), Morgan Stanley (MS), Pinnacle Financial Partners Inc (PNFP), PNC Financial Services Group Inc (PNC), Progressive Corp/The (PGR), Prologis Inc (PLD), Rexford Industrial Realty Inc (REXR), Synchrony Financial (SYF), Synovus Financial Corp (SNV), United Airlines Holdings Inc (UAL).